Segezha Group agrees to acquire forestry assets in Siberia for $515 million

Segezha Group will acquire 100% of the share capital of Inter Forest from Bonum Capital Ltd for $515 million. Segezha Group will finance the acquisition with funds from a new issue of RUB-denominated exchange-traded bonds as well as cash on hand from the Company’s IPO. The transaction is expected to close in 1Q 2022 following customary regulatory and corporate approvals, as well as fulfilment of other conditions precedent agreed by the parties.

Inter Forest’s assets include wood processing and logging enterprises, including four woodworking plants and one plywood plant, as well as a river fleet of 98 vessels. Inter Forest has an annual allowable cut of approximately 10.9 million m³.

As a result of the transaction, Segezha Group will have 16 million ha of forests under leasehold and an annual allowable cut of 23.6 million m³. The Group’s sawn timber production capacity will almost double to 3.221 million m³ (+1.5 millon m³). Pellet production capacity will grow by 1.8x to 380,000 tons (+170,000 tons). At the same time, the Company’s plywood production capacity will increase by 40,000 m³ to 232,000 m³.

Bonum Capital LTD, under a separate purchase and sale agreement, will acquire a stake in Segezha Group from PJSC AFK Sistema for $150 million, increasing its stake in the company from 4.6% to 13% and becoming its largest minority shareholder.